Consultant offers finance options for school aid revision

Tuesday, January 27, 2004

JEFFERSON CITY, Mo. -- A committee studying ways to revise Missouri's school funding formula heard Monday from a consultant who recommended two plans that would cost the state an additional $710 million to $1.5 billion a year.

John Augenblick, head of a Denver-based firm that advises states on school finance issues, has focused chiefly on the adequacy of state aid for schools, rather than on the issue of equity.

On Monday, Augenblick went before the committee to outline two proposals for rewriting the funding formula to produce additional state aid.

The more expensive option would require all districts to maintain the current minimum property tax levy of $2.75 per $100 of assessed valuation, with the state paying the difference between what the local taxes generate and the "adequate" funding level.

The numbers would vary by district.

Augenblick said the overall cost to the state would be $1.5 billion, while local property taxes would drop by $400 million.

His second proposal would give districts more flexibility in setting local property tax levies but would also require amending the Missouri Constitution.

That proposal would set a target levy of $3.44 per $100 assessed valuation but let each district depart by 20 percent up or down, producing a range of permitted levies from $2.75 to $4.13 per $100 assessed valuation.

Districts would have an incentive to adopt the target levy thanks to a sliding scale of state aid. Those setting a local levy at 80 percent of the target would receive just 80 percent of the state aid they would need to be "adequately" funded.

For a district to keep its levy lower than $3.44, it would have to prove the schools could meet state academic performance benchmarks.

Districts could set rates higher than $3.44, but would receive no state match for the additional money. They could even set the levy above $4.13 per $100 of assessed valuation, but would need voter approval.

"It's a question of what are the tax rates at which you want state matching to occur," Augenblick said.

He estimated the state would need another $710 million per year to fund that plan, while local property taxes would drop by $160 million.

But Shields pointed out that with such a system, many districts could raise their rates to $3.44, costing the state much more money.

Augenblick completed the study for the Missouri Education Coalition for Adequacy, whose members include Kansas City's Civic Council and Chamber of Commerce, the Hall Family and Ewing Marion Kauffman foundations, the Missouri School Boards' Association, all three professional teachers' organizations and the state parent-teacher association.

Otto Fajen, a lobbyist for the Missouri National Education Association, part of the group, acknowledged the proposal would be a tough sell.

"It seems like a big uphill battle," he said, noting that it may take an adverse ruling in court to force major action. "It's such a difficult political process."

Earlier this month, nearly half the state's school districts filed a lawsuit challenging the school funding formula, claiming the state does not spend enough on education and does not fairly distribute the money.

This year, basic state aid is expected to be about $2.54 billion.

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